From mine to coast: transport infrastructure and the direction of trade in developing countries

Seminari Applied

Mine-related transport infrastructure typically connects mines directly to the coast. This is most clearly seen in former colonies, whose transport infrastructure was originally designed to facilitate the export of natural resources in colonial times. We provide the first econometric evidence that such infrastructure biases a country’s structure of transport costs in favor of overseas trade, to the detriment of trade with neighbors and regional integration. Our main findings are that coastal destinations with more mine-to-coast infrastructure import relatively less from neighbors, and this effect is stronger when the infrastructure overlaps with routes used to import from overseas. However this effect is reversed for landlocked destinations, where the mine-to-coast infrastructure will have to cut through at fields, arguably because pipelines cannot be used to trade other commodities. We discuss the welfare implications of our results, and relate these to the debate on the economic legacy of colonialism, and the recent surge of Chinese infrastructure investment in Africa.